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Investment in Latin American BNPL startups is increasing

Atrato and Addi have raised more than $150 million in the past months as they grow their "buy now, pay later" (BNPL) solutions to Mexican and Colombian e-shoppers.

My online shopping significantly increased during the last year. I’m part of a regional phenomenon: Latin America was the region with the largest growth in online shopping (36.7%) worldwide in 2020, according to a report by eMarketer and Insider Intelligence.

This growth spurt has made the region ripe for the rise of BNPL startups, and venture capitalists are ready to back them up.

BNPL is booming along with e-commerce growth

When it comes to solutions that offer financial flexibility, buying online with interest-free monthly installments is certainly appealing. This has been the key reason why many investors are looking at BNPL startups in Latin America.

BNPL, short for “buy now, pay later”, is a solution that allows e-shoppers to make purchases and pay them in installments, which are often monthly. The only required payment is the monthly minimum due. It does, however, charge late fees for missed payments.

This financing solution has recently been gaining popularity: by mid-2020, it registered a 197% YoY growth, according to Cardify.

Latin America will not steer away from the BNPL’s boom. This form of payment represents a solution for the unbanked at a time when e-commerce is booming. Cash still reigns supreme in the region, just under 50% of the Latin American population is unbanked, and only about 15% have ever used a credit card, according to the latest Global Findex.

Atrato and Addi are leading the BNPL LATAM pack

Therefore, it’s not surprising that some of BNPL Latin American startups are already on the path to grow exponentially. Mexican-based Atrato and Addi, which originated in Colombia, are just two of them.

In early September, Atrato raised $15 million in debt. This was granted by Architect Capital three months after raising a $2.7 million investment round, in which Accel, Y Combinator, and Harvard Management Company participated, according to Crunchbase

With this funding, founders Rogelio Rea, Juan Casia, and Alejandro Chávez will seek to continue growing in their country of origin and provide payment facilities to both individuals and small businesses. 

Atrato’s strength is its integration with e-commerce payments. With its technology, it can finance up to $150,000 Mexican pesos ($7,545 USD) in a matter of minutes. 

Addi is not far behind. The Colombian BNPL startup raised $75 million more in its Series B, which was led by Greycroft and further extended the round to $140 million. 

Its investors also include Union Square’s Opportunity Fund, Andreessen Horowitz, Endeavor Catalyst, Foundation Capital, Monashees, and Quona Capital, according to Crunchbase.

As recently as May of this year, its founders had raised $35 million in a round led by Opportunity Fund. In addition, like Atrato, Architect Capital granted it a $30 million credit line.

So far, Addi has a presence in Colombia and Brazil but plans to reach more countries, including Mexico. These two BNPL startups have common goals: to continue growing in order to provide a simple, card-free payment option that allows the unbanked population to purchase online.

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